This is Jacob Emerson with the Becker's Payer
Issues podcast.
Here's your biweekly industry news briefing for August
14th.
The Medicare Advantage business is facing major challenges
industry wide. Government scrutiny is rising.
CMS regulations and payments are tightening. The cost
of care is rising, and negative media coverage
abounds. In response, the health insurance industry is
planning a 7 figure lobbying blitz in Washington
to fight mounting headwinds and offer a more
optimistic view of the benefits MA plans can
provide to older adults.
AHIP and its CEO, Mike Tufin, told Politico
on August 13th that they're going to be
doing everything they can to make sure that
policymakers across the political spectrum can be introduced
to these seniors and hear their stories and
learn firsthand
how passionately MA beneficiaries feel about their coverage.
Through digital and social media ads, along with
encouraging seniors to advocate for MA to lawmakers,
insurers aren't looking to convey the message that
MA plans provide better and cheaper health coverage
than traditional Medicare.
Mister Tufin said that seniors have been promised
by elected officials in both parties that their
Medicare coverage and care would not be cut,
And so our advertising is about reminding elected
officials that this is a big constituency
that really likes their Medicare Advantage coverage and
expects that promise to be kept.
The timing of the campaign comes ahead of
the Medicare annual enrollment period, which begins October
15th.
The lobbying campaign is not a new strategy
for the insurance industry, which most recently aired
a Super Bowl ad in February with a
simple message for lawmakers,
don't cut Medicare Advantage.
The 32nd ad references some of the major
challenges in the MA markets that's faced its
year, including reduced benchmark payments from CMS.
CVS, Humana, and Centene have all said they
will exit some markets in 2025
and potentially reduce benefit offerings
to accommodate the changing reimbursement environment and rising
costs.
On the media front, national outlets have been
reporting for years that most MA carriers have
faced allegations of billing fraud from the federal
government
and are being probed by lawmakers over their
high claims or prior authorization denial rates.
Upcoding, though, reentered the spotlight in July when
The Wall Street Journal began publishing new investigative
reports on the issue.
Back in October, the DOJ brought criminal charges
against a former MA executive at Elavance owned
HealthSun Health Plans, alleging that executive orchestrated a
scheme to submit false and fraudulent coding information
to CMS.
In the short term, MA payers such as
CVS are warning that senior care costs could
continue to rise in the second half of
this year, with the company noting elevated inpatient
dental and pharmacy claims in the second quarter.
Well, both CVS and Humana contend with those
rising inpatient costs in Medicare Advantage, but each
is pointing to different causes for the increases.
Last year, insurers began warning that MA costs
were climbing as older adults sought out services
put off during the pandemic.
UnitedHealth, the largest MA insurer, has reassured investors
that medical costs are in line with expectations.
Increasing medical costs in the Q2 of 2020
4 were mostly due to relaxed prior authorization
requirements during the Change Healthcare cyber attack. Humana
and CVS, the 2nd and lord 3rd largest
MA insurers, also said costs are on the
rise, especially within inpatient care. On July 31st,
Humana CEO Jim Recton said inpatient admissions among
MA
patients were higher than expected in the Q2.
The company's earnings guidance for the rest of
the year prudently assumes cost will stay elevated
through the end of this year. Humana's CFO
pointed to the 2 midnight rule as the
most likely reason for rising inpatient admissions.
At the beginning of this year, new CMS
regulations took effect requiring MA plans to provide
coverage for inpatient admissions rather than observation
when the admitting physician expects the patient to
require hospital care for at least 2 midnights.
CVS's CFO, Tom Cowhey, said inpatient cost rose
in the Q2
of 2024, but the company does not believe
it was because of the 2 midnight rule.
He said they're just seeing broad based inpatient
pressures
overall.
CVS's earnings guidance for the rest of the
year reflects those costs,
and and the second half of the year
could be higher in the first, he said.
He also said that if current trend continues,
CVS may have to dip into its reserves
to cover the cost of claims.
Well, a big question is looming around the
2024
presidential election.
Is the Affordable Care Act a central issue
or not? With fewer than 90 days until
voting day, the answer remains unclear as Democratic
and Republican campaigns operate with ambiguity when it
comes to their health care plans, and particularly
in the use of actions repeal and replace.
The Republican party's official platform presented at its
convention in Milwaukee in July includes no mention
of the ACA and limited references to other
health care reforms and policies.
Former president Donald Trump can his campaign's policy
plan, agenda 47,
contains sparse health care policy proposals that are
included in the chapter aimed at addressing affordability
more broadly.
The DNC is set to begin August 19th
in Chicago,
leading up to which vice president Kamala Harris
has criticized the Republican's stance on the ACA,
portraying the Republican candidate as a threat to
the law's existence.
As her August 6th rally in Philadelphia to
announce her pick for vice president, miss Harris
said that mister Trump would end the Affordable
Care Act and take us back to a
time when insurance companies had the power to
deny people with preexisting conditions if given the
chance.
A Trump campaign spokesperson told the New York
Times that president Trump is not running to
terminate the ACA. He is running to make
health care actually affordable.
His Republican vice presidential nominee though, JD Vance,
suggested in media that health care system reforms
would be a priority in a Trump administration.
The apparent lack of clarity regarding health care
policy in a presidential election is unusual.
The 2022 elections were the first in more
than a decade in which the security of
the ACA, enacted by president Barack Obama in
2010,
was not a central issue, and the Republican
party had moved away from its long standing
campaign to repeal it. Mister Trump made the
first move against the ACA this election cycle.
And in November, he took to Truth Social
to identify health care as one agenda item
for his 2024
campaign with to replace the landmark mall law
if he won a second term. That prompted
concerns among some senate Republicans.
President Joe Biden then recalled mister Trump's proposed
actions to the ACA in his campaign messaging
in March, but using the word terminate instead
Mister Biden said, quote, now Trump keeps telling
us he's going to terminate the ACA.
Think about what that means.
Mister Biden's remarks coincided with the 14th anniversary
of the law and following the announcement by
CMS, the 20,000,000 people enrolled in individual insurance
plans on the ACA exchanges for 2024.
That's the highest enrollment in the Exchange's history.
The ambiguity surrounding health care policy, though, might
be intentional according to The New York Times.
The most significant blow to the law could
come from inaction.
The Biden Harris administration passed the American Rescue
Plan Act in 2021.
That law enhanced subsidies for individuals purchasing health
coverage on marketplaces,
which are set to expire at the end
of 2025.
Mister Trump and congressional Republicans are unlikely to
support legislation
extending these subsidies, which experts credit for the
high enrollment numbers in recent years and
those have buoyed many large commercial payers' book
of businesses.
The ACA remains one of the most contested
statutes in American history facing 7 Supreme Court
challenges within the last decade. As of April,
62% of Americans hold a favorable opinion of
the ACA while 37%
view it unfavorably.
And finally, Blue Cross Blue Shield of Michigan
is the most efficient user of technology and
the most innovative user of artificial intelligence within
the Blue Cross Blue Shield system. That's according
to a new report from Harvard Business Review.
BCBSM
went from being the least efficient user of
technology in the Blue Cross system to the
most efficient as measured on a technology cost
per employee basis according to the Harvard Business
Review authors. Their journey underscores that prioritizing
security, compliance, a sound architecture, and proactive governance,
organizations can innovate with generative AI within regulatory
bounds.
The authors in interviewed management at BCBSM
to explore the company's technology strategy.
7 years ago, the payer was facing policy
and regulatory pressures stemming from the ACA and
an aging population along with changing customer expectations
like most insurers today. Today, the company has
launched new cloud capabilities,
security protocols, mobile support, 3 generative AI applications,
and more than 20 production AI solutions.
In the article, BCBSM's
management detailed 7 key principles that guided their
strategy.
Get board support on the latest tech initiatives,
involve departments and teams beyond just IT, ensure
scalability and data security,
create adaptable solutions to an evolving environment, continuous
employee education,
mitigate biases, and foster internal innovation.
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